Readers Respond: Cramer versus Lowe's

August 22, 2011

Home Channel News Friday contained a link to a video in which stock-market celebrity Jim Cramer made it clear that he thought Home Depot was out-executing Lowe's. We asked readers where they thought the rivalry was heading. Here's what we heard:

“Our industry has said since the beginning of Home Depot that if they ever figure out customer service we'll be in big trouble. My trips to HD in the last year for a few items have me concerned. I've actually had real quality help and fast checkout. My trips to Lowe's have been OK, but less inspiring customer service. Lowe's still has cleaner stores, but it appears to me that HD is doing a better job of taking care of the consumer and figuring out how to sell fill-in and construction accessories to the contractor. We cannot take for granted any longer that the contractor is our customer. I think Cramer has it right.”— Mitch James

“As a former player in the power tool and building materials market and now retired to the vineyards of the Ohio River Valley, the Lowe’s-versus-Home Depot story was very interesting to me. I was directly responsible for creating a new category at Home Depot in power tools with the DuraSpin line of automated screw guns. The product was aimed specifically at Home Depot due to its heavy share of the contractor power tool market in the late 1990s and early 2000s, and pricing for the product was slashed in negotiations to a point that assured it would be manufactured in China, not the United States. The products had a great run for about 10 years as the only tool of its type in the store. The product was a hit for my company then, Senco Products, and helped save the company from bankruptcy for another decade. It now lives on with the Home Depot house brand of Ridgid, which was Home Depot’s desire even from the beginning.

“With Home Depot, cost was always a big issue to the supplier, as Home Depot was looking for 10% per year price reduction to them. With Lowe’s, it wasn’t quite as brutal in line reviews, but they wanted exclusive products that ‘the other guys’ didn’t have. Not always possible or cost effective to a supplier. In my opinion, they had (have) a mix of products and a store set that appealed more to the DIY consumer and more in line with the female decision-maker and purchaser. Lowe’s made big changes to its stores with the addition of Spanish in many parts of the stores to make it easier for Hispanic contractors and consumers and hopefully draw them into the store for a bigger piece of the contractor market and grab the expanding Hispanic market, which didn’t materialize as they assumed. They seemed lost as the second-place hardware store, with fewer outlets and bigger capital expenses to try and catch up to Home Depot during a great economic time in the 1990s.

“Say what you want about Home Depot, but they have always known what they wanted to be and stuck pretty much to the model that got them to the top. Painful for suppliers who aren’t ready to rock and roll and relatively stable for investors who know them. Home building is not a big part of the construction market materials mix now, but Home Depot still resonates with DIYers doing remodeling projects and those contractors who are still busy and need a convenient supply of materials for their jobs.

“I’m no Jim Cramer fan, but he’s on the money when talking about Home Depot’s management team and leadership.”— Tom Day
Owner, Vinewerks

“Both Home Depot and Lowe's have a place in the home improvement industry. Cramer only addresses the performance of the two companies from the stockholder’s point of view. In my humble opinion, one business stands heads above the other. One has cleaner stores, inside and out. One has neater dressed employees. One has friendlier sales staff. One has more knowledgeable sales staff. One displays it merchandise in a more desirable fashion. One tends to locate in more desirable locations.

“All of this equates into a more pleasing customer experience. As an independent, we compete, for some products, with both of these businesses. We make every effort to create the ultimate in customer experience at our stores. So the more threatening competitor to me would be Lowe's.

“So where do I see this rivalry going? My vote goes to the provider of positive customer experiences.”— Tony Calistro
Ring's End Lumber

“Cramer is right. Depot has a very focused vision of their strategy. It is more right than wrong. Lowe's did not throw the expansion brakes on when they should have. They then panicked by throwing everything but the kitchen sink at the public hoping something would work. The basic principles of big-box retailing are always true in good times and bad. This is a painful lesson that Lowe's must learn.”— Name withheld